The recent Ninth Circuit decision, Gonzalez v. Arrow Financial Services, LLC, — F.3d —, 2011 WL 4430844 (9th Cir Sept. 23, 2011), addresses several issues relating to claims brought under the Fair Debt Collection Practices Act (“FDCPA”) and examines that statute’s interaction with the corresponding California debt collection statute, the Rosenthal Act.
Category Archives: State Consumer Protection Laws
Illinois Attorney General Sues Mortgage Rescue Companies For Alleged UDAP And Other Violations
Posted in Mortgage Foreclosures; State Consumer Protection LawsOn behalf of the people of the State of Illinois, Illinois Attorney General Lisa Madigan filed five lawsuits on September 27, 2011 against a host of companies, individuals, and lawyers engaged in mortgage rescue work. The cases — People v. Exelpol Management & Consulting, Inc., People v. Loan Litigators International, LLC et al., People v. ZeTrust Legal Services, P.C., et al., People v. Wildermuth, et al.,and People v. Legal Housing & Debt Advisors, LLC, et al. — all contain similar allegations and claims under Illinois Mortgage Rescue Fraud Act (“Rescue Act”) and Consumer Fraud and Deceptive Business Practices Act.
Arkansas Supreme Court Affirms Change in Maximum Interest Rate
Posted in Compliance; State Consumer Protection LawsEarlier this Summer, the Arkansas Supreme Court affirmed the effectiveness of the 89th Amendment to the Arkansas Constitution, which was approved by Arkansas voters last November. For consumer credit, the amendment permits creditors other than federally insured depository institutions to charge interest on loans or contracts up to a maximum rate of 17% per annum.
Previously, the Arkansas Constitution only permitted interest at the lesser of (i) 17% per annum or (ii) 5% per annum in excess of the 90-day commercial paper rate announced by the Federal Reserve Bank of St. Louis. Contracts charging a rate exceeding 17% per annum were void as to both principal and interest; contracts charging a rate exceeding the rate in clause (ii) above were void as to unpaid interest.
Ninth Circuit Issues Ruling on Limitations of Preemption
Posted in Preemption; State Consumer Protection LawsThis week, the U.S. Court of Appeals for the Ninth Circuit ruled that the Rees-Levering Act (also known as the California Automobile Sales Finance Act), a California law regulating debt collection and repossession, is not preempted by the National Bank Act.
In Aguayo v. U.S. Bank, ___ F.3d ___, No. 09-56679 (9th Cir. Aug. 1, 2011), the Ninth Circuit held that a national banking association is subject to the state law, which requires the lender (and any other auto loan lender) to provide each obligor with 15 days’ advance written notice of the lender’s intent to dispose of a repossessed or surrendered vehicle and of the obligors’ right to redeem the vehicle or reinstate the contract during such 15-day period.
Fifth Circuit Interprets Texas Constitution, Upholds Variable Rate Home Equity Loan
Posted in State Consumer Protection LawsOn July 22, 2010, the Fifth Circuit affirmed a Western District of Texas opinion in favor of a lender and loan servicer in a lawsuit brought by mortgagors who alleged that the terms of their home equity loan violated the Texas Constitution. Cerda v. 2004-EQR1 LLC and Barclays Capital Real Estate Inc., — F.3d —-, 2010 WL 2853651 (5th Cir. July 22, 2010) (King, J.). Applying Texas law in a diversity action, and with one judge dissenting on one issue, the Fifth Circuit declined to certify the issues presented to it to the Texas Supreme Court and instead interpreted Article XVI, Section 50 of the state constitution in accordance with past Texas Supreme Court decisions, reliance on agency determinations and textual interpretations, and at one point an “Erie guess.”
Indiana Consumer Protection Law Violates The Commerce Clause
Posted in Consumer Financial Protection Act; State Consumer Protection LawsIn a January 28, 2010 opinion, Midwest Title Loans, Inc. v. Mills, the Seventh Circuit has affirmed a permanent injunction issued by the district court invalidating a section of Indiana’s version of the Uniform Consumer Credit Code for violating the Commerce Clause of the U.S. Constitution.
Indiana added a provision to the Code in 2007 called the “territorial application” provision. It states that a loan is deemed to occur in Indiana if a resident of the state “enters into a consumer sale, lease or loan transaction with a creditor … in another state and the creditor …has advertised or solicited sales, leases, or loans in Indiana by any means ….” If the territorial application provision is triggered, the lender becomes subject to the Code and is bound by its restrictions, including a ceiling on the annual interest rate that a lender may charge.